Best rental yields in London 2025
Last updated: January 2025
Are you thinking about investing in property in the capital of England? Explore the best rental yields in London with our comprehensive 2025 investor’s guide.
With a current population of over 9.5 million people, the vibrant and cultural city of London is a fabulous place for property investors to earn a great return. The ever-increasing house prices, rents and rental demand make it a fantastic place to invest in long-term rental properties and short-term rental properties alike.
Read on to find out the best buy-to-let areas in London, and where the best rental yields in London can be achieved.
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1. Where to buy property in London?
Here, we reveal what we consider to be ten excellent parts of London for property investment.
According to the latest available data from Track Capital, the best buy-to-let area in London is East Ham (E6), with an average rental yield of 6% and a five-year growth price of 22%. The following areas and postcodes are the other top ten areas of the capital for rental yields of over 5% in 2025:
- Thamesmead – average rental yield of 5.9%.
- Stratford, West Ham – average rental yield of 5.8%.
- Abbey Wood – average rental yield of 5.8%.
- Tottenham – average rental yield of 5.8%.
- Plaistow, Upton Park – average rental yield of 5.7%.
- Hackney, Homerton – average rental yield of 5.5%.
- Bethnal Green, Shoreditch – average rental yield of 5.4%.
- Dulwich – average rental yield of 5.2%.
- Upper Holloway, Archway – average rental yield of 5%.
According to research from Track Capital, the highest rental yield in London is East Ham (E6), with a yield of 6%. It is followed by Thamesmead, Woolwich (SE28) (5.9%), Stratford, West Ham (E15) (5.8%), Abbey Wood (SE2) (5.8%), and Tottenham (N17) (5.8%).
Buy-to-let East Ham (E6)
- 6% rental yield
- Average rental price £2,055 per month
In 2025, East Ham is one of the few London areas with a rental yield of 6% or over, making this an attractive proposition for buy-to-let investors.
Moreover, you can command a monthly rent of just over £2,000 per month, while the five-year property price growth is at 22% in East Ham, one of the best in London.
Many recent regeneration projects have been undertaken in East Ham and the surrounding areas, making this postcode much more desirable than it was a decade ago.
Buy-to-let Thamesmead, Woolwich (SE28)
- 5.9% rental yield
- Average rental price £1,763 per month
Located in south-east London, Thamesmead is another attractive area for buy-to-let investors in 2025. Primarily, this is due to the high average yield of just under 6% and the fact that property prices are much lower here than in other parts of the city, with an average of £357,000.
The area is on the banks of the River Thames and has ample parkland for residents. The population is around 41,000, and thanks to the projected DLR extension from Gallions Reach, this is now a great spot for commuters, who were previously discouraged from investing here due to the lack of an underground or rail station nearby.
Buy-to-let Stratford, West Ham (E15)
- 5.8% annual yield
- Average rental price £2,236 per month
Thanks to post-2012 regeneration projects following the London Olympics, Stratford is another much-improved London area with a growing population.
Families and young professionals are drawn by Stratford’s affordability and the excellent transport links to the city centre.
Property prices average £464,190 in Stratford, with yields of 5.8% expected for buy-to-let investors. What’s more, the average rent of £2,236 per month ensures a decent return on your investment.
Buy-to-let Abbey Wood (SE2)
- 5.8% rental yield
- Average rental price £1,926 per month
If you’re looking to invest in a London area with green spaces and breathing space, Abbey Wood in the south-east of the city is an attractive option.
Though historically isolated and with long journey times into the centre, Abbey Wood is now the last stop on the new Elizabeth Line, significantly reducing journey times into London and on to Heathrow.
As a result, house prices have recently increased significantly in Abbey Wood, though you can still buy something for £400,000 on average. You can expect rental yields here of 5.8%, with an average monthly rent of £1,926.
Buy-to-let Tottenham (N17)
- 5.8% rental yield
- Average rental price £2,212
Though many people would have overlooked Tottenham in recent years due to high crime rates and a lack of local services, the area is another that has benefitted from regeneration, thanks in large part to the newly constructed Tottenham Hotspur Stadium.
The Stadium, also used for conferences and other sporting events, brings millions of visitors to the area annually, while more than £6 billion in funding has been planned for the nearby Meridian Water project, bringing new homes and amenities to the postcode.
Tottenham yields are 5.8% on average, and you can expect an average monthly rent of £2,212 if you invest in a buy-to-let property here.
2. Is buying real estate in London a good investment?
The short answer? Yes. Buying real estate in London is a great investment because of continually increasing property prices, growth in employment and ever-increasing rental demand, despite the increasing popularity of remote working.
2025 is a great year to buy in London
Forecasts reveal “cautious optimism” in the 2025 London housing market, which is predicted to be a buyer’s market. This will be driven by stamp-duty relief for first-time buyers and lower mortgage rates for borrowers.
Five-year projections show that by 2028, the price of property in London will likely be worth an average of £70,376 than it is today. So, if you can invest in the London housing market, 2024 will likely be a great year to make your move.
Employment Growth
Now that employees are gradually returning to office environments, employment is at its highest ever. Despite the attractiveness of remote working, regions in Greater London like the City of London still provide an enormous number of jobs for London residents.
Increasing Rental Demand
With rising employment rates comes increasing rental demand. For long-term and mid-term lets, increasing employment means many more people looking for properties. An increasing number of young professionals are choosing to rent as an alternative to buying property, and an ever-booming number of tourists are present, excellent opportunities for short-term rental accommodation.
3. What is the average rental yield in London?
At the start of 2025, average rental yields in England and Wales grew by 0.6% to an average of 7.4%. London yields typically range from 5-6%, depending on the area, but some areas within the city can be as low as 2-3%, so it’s crucial to do your research.
The best rental yields in England can be found in the North East of the country, with yields of 9.3% and much lower purchase prices than in London. Moreover, the East Midlands is an attractive location for buy-to-let investors, with an average annual yield of 8.2%.
4. Why buy property in London?
Easy access to funding, potential for huge capital appreciation, rising rents and a stable demand, are just a few of the reasons why more and more property investors are choosing to buy property in London.
Access to Funding
With low-interest rates and a large number of lenders in the market, mortgages are fairly easy and cheap to come by at the moment, which is one reason why investors are choosing to put their money in property, particularly in London. With many lenders joining the market, increased competition means that borrowing is relatively cheap, despite recent increases in interest rates.
Capital Appreciation
Capital appreciation is always promising for a capital city like London. With long-term forecasts predicting ever-increasing house prices and an average property price of £686,299, London boasts many opportunities for investors from across the globe to benefit.
Rising Rents
Kensington & Chelsea is the most expensive part of the city, with an average rent of £3,459 per month. In contrast, Bexley is the cheapest area for rent, with an average of £1,442 for a 2-bed flat.
Stable Demand
Demand has always been very stable in the capital, and now it’s back on the rise after the Coronavirus pandemic. Demand is always strong for long-term rental properties, with an estimated 5.8 million jobs available in the capital. There is ever-increasing demand for short-term rental and holiday properties, with the city regularly attracting over 20 million visitors per year.
5. Can foreigners buy real estate in London?
Yes, foreigners are able to buy real estate in London. However, if they are not buying the property out of their own pocket then they may need to pay a larger deposit (up to 40% in some cases) and may only be able to secure mortgages with higher interest rates. Foreign investors should speak to a qualified mortgage broker for more information about their funding options.
6. What is the tax on rental income in London?
If you invest in property in the UK, you will be subject to Stamp Duty Land Tax, Income Tax, Capital Gains Tax and Inheritance Tax. Property investors should speak to a qualified tax professional for more information about their tax requirements and liabilities related to rental income and the sale of investment properties in the UK.
Stamp Duty Land Tax
Owners of UK property are subject to Stamp Duty Land Tax when they buy a freehold or leasehold property, a property in a shared ownership scheme or if they are transferred land or property in any other way, for example, they take on a mortgage. Different rates apply depending on whether you are a first-time buyer, UK resident or second homeowner.
Income Tax
Owners of rental properties are subject to income tax, just like most people in the UK, at a rate between 20% and 45%. Investors will receive the first £1000 of property income tax-free and will be taxed on the rest of their income in accordance with their earnings.
Capital Gains Tax
UK and foreign investors may also be subject to capital gains tax when they sell a property that is not their main residence.
Inheritance Tax
Any proceeds from a buy-to-let investment, be it rental income or the asset itself, are subject to inheritance tax at 40% upon death, provided they do not fall within any allowances.
7. Is now a good time to buy real estate in London?
Yes, the potential for capital appreciation, increasing rents and increasing rental demand in London makes it a great time for property investors to enter the market or increase the size of their portfolio.
8. Short, medium or long-term?
In London, residential and academic areas of the city are traditionally better suited to long-term and mid-term rental investments, whereas the more touristic areas of the city are better suited to short-term rental investments.
GuestReady is a short-term rental management company that can help property investors predict and manage their estimated returns for their property investment in London. GuestReady assists property investors with the management of their short-term rental businesses by offering a 24/7 communication service with guests in several languages, reservations management, online advertisements optimisation, cleaning and maintenance and décor and professional photography.
Short-term rental opportunities in London allow investors to achieve much greater returns than they would with a long-term rental strategy while providing them with the flexibility to stay in the property themselves as and when they need to.
GuestReady helps to make this form of renting as hassle-free and passive as possible, by implementing key changeover systems that allow for seamless transitions between guests, something which is important for those important five-star reviews.
London is a great place to invest for a number of reasons. The increasing house prices present a great opportunity for capital appreciation while increasing demands and rents make for strong cash flow potential.
9. Invest in London with GuestReady
GuestReady has years of experience working with property investors. We know where the best real yields and we help investors by providing them with insightful information on their investments and by presenting them with short-term rental management plans for their hassle-free new business.
